Building capacity to help Africa trade better

Walmart puts faith in SA’s future


Walmart puts faith in SA’s future

Walmart puts faith in SA’s future

Spending a week recently in the US city of Bentonville, Arkansas, to attend Walmart’s shareholders’ meetings, underscored why the company’s investment in South Africa three years ago when it bought a majority stake in Massmart (which I now chair) was a resounding vote of confidence in South Africa that ought to be leveraged to the maximum.

To give a sense of what the investment meant, consider that Walmart is the largest single company on the planet. It had net sales of more than $473bn in the past financial year and 2.2-million employees across the world. South Africa was chosen out of 54 countries in Africa as Walmart’s investment location to grow shareholder value and extend its footprint into Africa.

Massmart, founded by Mark Lamberti in 1990, was chosen as the best platform of all the retailers in South Africa and Africa.

Walmart’s decision was a tribute to Lamberti’s business acumen and entrepreneurial capabilities.

I was privileged to be on the Massmart board of directors when the approach by Walmart was made and stepped down once the transaction was finalised.

That was South Africa’s moment of glory and it will remain so for some time to come. South Africa can – and must – do more to capitalise on this opportunity to articulate and perpetuate a compelling value proposition to other global investors to invest massively in existing and new business ventures.

There can’t be growth without investment. Nor can there be job creation without investment. There can’t be investment without an enabling environment underpinned by smart regulations that achieve the fine balance between the needs of the economy and society.

South Africa needs more local and global investor confidence to unleash its full economic potential and overcome its anaemic economic growth, which underperforms other peer emerging markets.

Massmart will continue to be a major contributor to economic growth and job creation in South Africa and Africa. Furthermore, Massmart’s globally competitive business model enables it to help its customers to save money.

This is achieved by Massmart’s tried and tested “high volume, low price” business model.

Linked to this is a well-coordinated approach to developing and partnering with local suppliers. It makes sense for the sources of supply to be closer to the areas of consumption, and this enables the company to contribute to local economic development in rural and historically disadvantaged communities.

For example, through its Ezemvelo direct farm programme, Massmart has partnered with 164 smallholder farmers who are assisted with input loans for farming vegetables, agricultural extension services, mentorship and basic financial management training. Other local suppliers have been able to join the Walmart global supply chain, which helps us to create and sustain more South African jobs. It is an area of opportunity for continuous improvement.

South Africa needs a targeted, coordinated and sustained campaign to woo massive inflows of foreign investment to the country. This should be one of the top priorities for President Jacob Zuma’s second administration, along with fixing our education system.

However, the government needs the collaboration of business leaders in a sustained campaign to create the right investment climate and position the country as a magnet for the attraction and retention of foreign direct investment.

The key for Zuma to build a legacy is to identify one or two important areas and make a lasting impact that breaks new ground and raises the bar in terms of global excellence.

Turning the economy around to unleash high, job-rich and sustained economic growth as well as fixing our education system are areas of opportunity for a “Zuma moment”.

This is the time for a new, creative and smart partnership between government and business to propel the country to greatness.

The reduced majority the ruling party got from last month’s elections should galvanise it to accelerate the execution of good policies in ways that propel South Africa to sustained global competitiveness and prosperity for all. This requires disciplined, decisive and effective leadership on the big issues that can unleash a turnaround in the country’s pedestrian growth rate and stubbornly high rate of unemployment.

We need Zuma to begin this change by instilling an ethos of a consistently capable state that delivers – and is underpinned by competent and passionate civil servants and credible, respectable and inspiring ministers and politicians.

The effective delivery of social services is as important as creating an enabling world-class environment in which local and foreign investors can deploy their capital. Business thrives in an environment underpinned by social cohesion and solidarity. That is why Finland, Japan, Norway and Sweden rank high on the global competitiveness league tables.

Rustenburg, in North West, has turned out to be one of the most globally uncompetitive places to mine because of the low levels of social cohesion, which are reflected in the protracted strike that has further sullied South Africa’s global rating in labour relations stability.

The challenge now is in finding effective mechanisms to minimise the adverse impact of the strike. This requires joint action by business and trade union leaders, who should put the national economic interest above all else.

It is in the best interests of leaders in the business, labour and government sectors for South Africa to be consistently positioned as an investment location of choice for investors.

We all stand to win in a winning South Africa.

Dlamini is the chairman of Massmart and recently attended the annual Walmart shareholders’ meeting

This article was first published in Sunday Times: Business Times


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